Social Security Testimony Before Congress

Statement of David Weaver,
Associate Commissioner, Office of Program Development and Research
Social Security Administration
before the House Committee on Ways and Means
Subcommittee on Social Security

June 19, 2013

Chairman Johnson, Ranking Member Becerra, and Members of the Subcommittee:

Thank you for the opportunity to discuss our responsibility to help disability beneficiaries
return to work, or to go to work for the first time in the case of young adults with
disabilities receiving Supplemental Security Income (SSI). Our beneficiaries have a
wide-range of impairments and represent diverse age groups, levels of education, work
experience, and capacities for potentially returning to work. Despite significant resource
and staffing challenges, helping these beneficiaries with employment opportunities
remains one of our highest priorities. We are making progress and building on our
commitment that began over 50 years ago to help beneficiaries return to work. Today, I
will discuss several topics related to our return to work efforts, including statutory work
incentives, the Ticket to Work (Ticket) Program, and our demonstration projects.

Introduction

We serve a diverse population of Americans with disabilities through the Social Security
Disability Insurance (SSDI) and the Supplemental Security Income (SSI) programs. In
calendar year 2012, we paid about $135 billion in SSDI benefits to 10.9 million people,
and about $33 billion in SSI benefits to 5.5 million people aged 18 to 64 based on
disability.

According to our Chief Actuary, most of the growth in the SSDI rolls over the last 30
years can be attributed to a combination of demographic factors and increased
employment of women. Specifically, the baby boom generation aged and reached its
disability-prone years and more women entered the labor force. Changes in the law that
raised the full retirement age further added to program growth as more people formerly
classified as retired were classified as disabled.

While the SSDI program constitutes a part of our Nation’s social safety net, we cannot
say that the benefits it offers substantially discourage work. For example, in December
2012 a disabled worker received, on average, a little over $1,100 in SSDI benefits per
month. Thus, a disabled worker seeking more than a basic standard of living cannot rely
on the SSDI program. Quite simply, he or she must return to work in order to achieve
long-term financial stability and independence.

We must not downplay or dismiss the very real difficulties disability beneficiaries face.
The Social Security Act (Act) defines disability stringently – a person must be unable to
engage in any substantial gainful activity (SGA) due to a physical or mental impairment
that has lasted or is expected to last at least one year or to result in death. SSDI
beneficiaries are some of our Nation’s most severely disabled people. Realistically, we
cannot expect most of them to return to work or leave benefits through substantial
earnings. For most, self-supporting employment may not be a viable option. In fact,
while approximately 40 percent of SSDI beneficiaries express interest in working, only about three percent of those awarded benefits in 1996 had their benefits terminated due to
work activity within a 10 year follow-up period.1

Therefore, we need to be realistic and strategic about the number of beneficiaries who can become
financially independent through work and earnings. We must also ensure that our work incentives
and the Ticket program provide a path to jobs that lead to self- supporting futures.

Work Incentives

The Act includes a number of incentives to encourage disability beneficiaries to return to work.
Generally, these incentives provide beneficiaries with continued benefits and medical coverage
while working or pursuing an employment goal. For example, in the SSDI program, work incentives
include the trial work period and the extended period of eligibility. The SSI program has
different work incentives, such as special rules for counting earnings after disability is
established and the Plan to Achieve Self-Support. Both programs have special rules about
impairment-related work expenses, expedited reinstatement, and medical insurance. The Ticket to
Work and Work Incentives Improvement Act of 1999 (Ticket Act) extended Medicare and Medicaid
coverage for individuals even after they have become fully self-supporting and earned their way off
SSDI or SSI. I have attached a more comprehensive description of our work incentives at the end of
my testimony (Appendix A). Because work incentives are integral to both of our disability programs
and are relevant to a significant number of disability claims, we have not captured work incentive
costs as a separate budget item. Our work incentives should be viewed as a total package to fully
appreciate the multiple levels of support available to help our beneficiaries achieve their goal of
greater economic independence.

We have trained our field office personnel to explain work incentives, and we publish information
on our website and in print to help people understand them. Nevertheless, as illustrated by this
hard to understand chart, our work incentive provisions are complex and may be difficult for
beneficiaries to understand and can be challenging for us to administer.

Because the work incentive rules are different for SSDI than they are for SSI, the
situation is even more complex if a person is entitled to both types of benefits.

The Vocational Rehabilitation Cost Reimbursement Program

The issue of return to work has been a part of any discussion about the Social Security
disability program since it was created by the Social Security Amendments of 1954. The
law included a requirement that all disability claimants be referred to the State vocational
rehabilitation (VR) agency “so that the maximum number of disabled individuals may be
restored to productive activity.”2

Today, the VR cost reimbursement program is the primary employment support program
used by our beneficiaries. VR cost reimbursement came into existence in the early 1980s
after Congress determined that more accountability was required of State VR agencies
receiving Trust Fund dollars to provide services to our beneficiaries. The program
requires a State VR agency to file a reimbursement claim with us after the agency
completes its work with a beneficiary and that beneficiary becomes employed. The claim
documents the services provided and the cost of those services, both direct and indirect.
Once we verify that the beneficiary earned an amount sufficient to allow reimbursement,
the State VR agency receives funds from us as program income.3 The statutory
reimbursement standard for State VR agencies is earnings at the SGA level for a continuous period of nine months. In FY 2012, we made 5,343 payments to VR agencies
in the total amount of $78.8 million based on the work activity of 4,418 beneficiaries.4

The Ticket to Work Program

Despite the State VRs’ long history as partners in our employment support efforts, access
to VR services remained an issue for disability beneficiaries. As Chairman Jim Bunning
noted during a hearing in July 1997 before this Subcommittee:

…fewer than one-half of one percent of disabled recipients leave the rolls because
of successful rehabilitation. Social Security and disability recipients are just not
getting rehabilitative services they need…. Congress must give recipients with
disabilities the opportunity to obtain the tools and training they need to return to
productive and self-sufficient lives.5

In 1999, Congress passed the Ticket Act, which established the Ticket program.
Congress intended the Ticket program to expand the universe of service providers and to
provide beneficiaries with choices beyond the State VR agencies to obtain the services
and supports they need to secure and maintain employment.

Ticket to Work Program Overview

Under our current Ticket program rules, any adult SSDI beneficiary or individual
receiving SSI benefits based on blindness or disability is eligible to participate in the
Ticket program. A beneficiary who is eligible to participate in the Ticket program may
choose to assign his or her Ticket to an Employment Network (EN) or work with a State
VR agency. We contract with ENs (which are qualified State, local, or private
organizations) to provide or coordinate the delivery of employment support services to
our disability beneficiaries. Some State VR agencies also act as ENs.6 Recently, we
approved an AmeriCorps project to function as an EN.

Because ENs (including the Department of Labor’s American Job Centers and state and
local workforce investment boards) are a critical element of the Ticket program, we rely
on several oversight measures to help ensure they provide quality service. We have a
specialized quality assurance unit that verifies the qualifications of prospective ENs and
monitors the performance of current ones. Two years ago, we established new criteria for
assessing EN qualifications and defined EN performance standards more clearly. These
standards are a part of every EN agreement and measure whether the ENs substantially provide the services they agreed to provide to the beneficiaries. They also measure job
placement rates for each EN and the extent to which the ENs help our disability
beneficiaries achieve at least SGA-level earnings. These standards also require that ENs
maintain at least quarterly contact with beneficiaries to assist with job retention.

Beneficiaries, ENs, and State VR agencies voluntarily participate in the Ticket program.
An EN decides whether to accept a Ticket from the beneficiary. Once a beneficiary
assigns a Ticket to an EN, the EN provides employment support services to assist the
beneficiary in obtaining self-supporting employment. The beneficiary receives these
services at no charge. Consistent with congressional intent, we pay an EN only when it is
successful in assisting beneficiaries secure and maintain employment.

As of May 31, 2013, there were 44,452 Tickets assigned to 653 ENs. The measures we
have taken to enhance the performance of ENs that participate in the program have
resulted in fewer ENs, but the participating ENs are better qualified to help beneficiaries
achieve their work goals. We have also directed ENs to put more emphasis on job
retention and seek clients that want to become financially independent from disability
cash benefits. The process of improving the performance of ENs is a gradual one.

Overall, we estimate that we spent approximately $46 million to run the Ticket program
in fiscal year (FY) 2009, including the cost of agency staff responsible for overseeing the
program, milestone and outcome payments to ENs, and support contracts.7 This estimate
is the best and most current one available for program costs. In FY 2012, we made
46,001 payments to Employment Networks in the total amount of $28.4 million dollars
based on the work activity of 8,408 beneficiaries.

The Ticket program can be valuable even if it helps only a small number of beneficiaries
return to work. Each disability award is expensive; on average, an award costs about
$250,000 in SSDI benefits and Medicare costs over a beneficiary’s lifetime. To the
extent that we get some of our beneficiaries back to work and off the disability rolls, we
will save a portion of those program costs; it does not take many beneficiaries to return to
work for those savings to add up.

Ticket to Work Program Success Stories

We continue to take steps to improve the Ticket program. For example, we are
researching how former disability beneficiaries fare after they earn their way off the rolls.
We plan to survey beneficiaries and analyze data to identify needs, characteristics, and
experiences of these former beneficiaries to improve our return to work and job retention
efforts.

The Ticket program has already helped some disability beneficiaries. Let me share a few
stories.

In 2007, T. lost her job when her employer downsized. She was also diagnosed
with cancer, and its severity qualified her for SSDI benefits. Those benefits kept
her from losing her house, but they could not guarantee financial stability. Once
she completed her cancer treatment, she needed to resume working.

However, T. was concerned that she might not fit in with the modern workforce.
She was also concerned that she would prematurely lose her benefits. Using her
Ticket, she found an EN that helped her develop a plan to achieve her
employment goals. The EN explained our work incentives to her, helped her
improve her job-seeking techniques, and recommended that she develop her
computer skills. Today, T. works as a loan specialist at a bank and as a trainer for
a retailer. She no longer receives or needs benefits.

After being diagnosed with lung cancer, F. had to take a medical leave of absence
from her job. She qualified for SSDI benefits. These benefits helped cover some
of her family’s household expenses. However, they would not be enough to keep
her family farm. Therefore, she was worried that she would lose her job if she
stayed on leave for too long. After a year of treatment, she used her Ticket to
receive services that allowed her to transition back to work. F. was able to keep
her job and her farm. She does not receive benefits.

R. served in the military. After leaving the military, he worked as a civil servant.
It was during this period when R. began to experience pain and difficulty walking.
A surgical procedure to correct a ruptured disc left him paralyzed. The
Department of Veterans Affairs (VA) helped get him SSDI benefits. Most
importantly, VA introduced him to the Ticket program, and connected him to his
EN. The Ticket program provided him the safety net supports and opportunity he
needed to return to work.

Today, R. assists and advises other disabled veterans on how to access VA health
care and employment support services. He does not receive benefits.

Other Return to Work Efforts

The Ticket Act created two other programs, the Work Incentives Planning and Assistance
(WIPA) program and the Protection and Advocacy for Beneficiaries of Social Security
(PABSS) program, to supplement the assistance available at our field offices. The two
programs authorize grants to organizations with ties to the disability community at the
local level.

The full-year continuing appropriations act that Congress passed for FY 2013 included
$23 million and $7 million for the WIPA and PABSS programs, respectively. These programs are useful tools in our return to work efforts. We expect to make WIPA awards
by August 1, 2013, and WIPA services will resume immediately thereafter.8 We have
worked closely with the 57 PABSS grantees to resume services as quickly as possible.
We estimate that all of the grants will be awarded by June 30, 2013.

Work Incentives Planning and Assistance

The WIPA program assists disability beneficiaries across the country. As I mentioned
earlier, work incentives are complex and may be difficult to understand. Our WIPA
grantees are community based organizations that help disability beneficiaries understand
work incentives and the effect of earnings on disability and healthcare benefit eligibility.
Currently, 95 of the 102 WIPA projects funded in 2012 are expected to resume services.
We will have a WIPA project in almost every State, and we have successfully negotiated
with WIPA projects within the same State or a contiguous State for coverage of
catchment areas addressed by the seven previously funded WIPA projects that declined
resumed funding in 2013.9

Specifically, the grantees offer information and referral (I&R) services and intensive
services to our disability beneficiaries. I&R services consist of providing general
information about work incentives and referrals to employment and support services.
WIPA services help a beneficiary determine his or her work goals and the best way to
achieve them.

Intensive services include the following:

counseling individuals on available options for obtaining or maintaining
employment based on their goals and abilities;

providing individualized information to beneficiaries regarding the effect of
changes in employment or personal circumstances on their benefits and health
care coverage; and

providing long-term assistance and support to beneficiaries as changes occur in
their employment and benefits status.

Given the complexity of our work incentives, providing this assistance is of vital
importance and is probably the WIPA program’s most valuable service. We have also developed six WIPA benchmarks and one annual performance indicator.9 The annual
performance indicator will measure the extent to which the WIPA services facilitated
beneficiaries achieving full employment and self-sufficiency. The WIPA projects use the
benchmarks as performance targets.

Technical Assistance

We set aside $3 million of the WIPA funds for our training and technical assistance
contractor. Currently, Virginia Commonwealth University (VCU) helps us administer
and manage the National Training Center that provides training, certification, and
technical assistance to the WIPA projects. Specifically, VCU trains and certifies
Community Work Incentives Coordinators so that each WIPA project is staffed with
experts with the capacity to provide the most current and accurate information to our
beneficiaries, enabling them to make informed choices about employment and financial
self-sufficiency.

Protection and Advocacy for Beneficiaries of Social Security

The PABSS is a network of organizations (State-designated protection and advocacy
agencies) in all 50 States, the District of Columbia, U.S. territories, and the tribal
entities. This network represents the Nation’s largest provider of legal-based advocacy
services for persons with disabilities. While WIPA projects provide our beneficiaries
with information about our work incentives, the 57 agencies in the PABSS help
beneficiaries obtain VR services, appropriate employment supports, and legal guidance
and representation as needed when there are obstacles to employment and financial self-sufficiency.

The PABSS grantees provide I&R and in-depth services to beneficiaries. I&R are shortterm
interventions that range from simply referring a beneficiary to a more appropriate
service provider to making calls or writing letters on a beneficiary’s behalf. In-depth
services involve more assistance than I&R and range from short-term problem solving
and legal assistance and counseling to litigation help.

The primary goal of the PABSS grantees is to advocate for the removal of barriers to
work. To maintain the flexibility of the PABSS, we do not dictate the number or types of
cases a grantee must take. Instead, we outline the general nature of the services as part of
the terms and conditions of the award. We monitor PABSS grantees by reviewing
performance reports that offer numerical and narrative information about the project
activities supported under PABSS funding. Our project officers review those reports to
ensure that the cases described fit within the PABSS’ mission and grant conditions.

Disability Demonstration Projects

The Ticket Act authorized us to test how certain statutory changes to the disability
program would affect beneficiary work activity.10 Pursuant to this demonstration
authority, we initiated four demonstration projects: (1) the Benefit Offset National
Demonstration (BOND); (2) the Mental Health Treatment Study (MHTS); (3) the
Accelerated Benefits Demonstration (AB); and (4) the Youth Transition Demonstration
(YTD). Each project has distinct objectives.

Benefit Offset National Demonstration

Because SSDI beneficiaries lose all of their cash benefits for any month in which they
engage in SGA after completing the trial work period, they are often reluctant to attempt
to work. The BOND project tests the effects of replacing this “cash cliff” with a benefit
offset that reduces SSDI benefits $1 for every $2 a beneficiary earns above the SGA
threshold. This benefit offset takes effect after the beneficiary completes the trial work
period and subsequent three-month grace period, during which the beneficiary continues
to receive his or her full benefits regardless of earnings amounts. We also offer certain
BOND participants enhanced work incentives counseling. Based on data from this
project, we will estimate the effect of the benefit offset and counseling on beneficiary
work activity.

This demonstration consists of two phases. During the first phase, which lasted from
August 2005 to December 2008, we conducted a four-State pilot project. 11 These States
tested a $1 benefit offset for every $2 earned above SGA in combination with benefits
counseling. Published research on outcomes for the four-State pilot found increases in
the percentage of individuals earning above SGA, but also increases in benefit payments.
However, because the sites and pilot participants were not nationally representative,
researchers have noted that only a national test will yield results that provide definitive
information on the earnings outcomes and potential costs associated with a
$1-for-$2 offset.12

The four-State pilot has also helped inform our national demonstration project. In the
four-State pilot, we used a manual process instead of building an automated system for
delivering notices and adjusting benefit payments. We used our experience from the pilot
to identify the extensive systems work that was necessary to create an automated process
of delivering notices and benefit payments for the much larger sample of beneficiaries in
the BOND.

During the second phase, we are conducting a more expansive demonstration in sites
across the Nation. We started full field operations of BOND in April 2011 and have met our enrollment goals. We currently have over 1,000 beneficiaries working at a level
where their benefit payment is offset. We are conducting additional outreach to ensure
that participants are aware of the BOND program and the modified rules. Because
enrollment ended in September 2012, we do not have meaningful data yet on
employment outcomes.

Regarding administrative costs, we spent $10.6 million dollars on the BOND design
contract and $9.4 million on the four-State pilot. Our implementation and evaluation
contract is for $124.8 million, and we expect the project will be completed within the
$124.8 million. We are completing systems work with Lockheed Martin and will have
spent $8 million on the systems changes to administer BOND payments. The total nonbenefit
cost of BOND and the four-State pilot activities will be approximately $152.8
million.

Mental Health Treatment Study

We awarded a contract in September 2005 for the MHTS. This study tested the
hypothesis that access to medical care and employment supports would enable SSDI
beneficiaries with schizophrenia or affective disorders to return to work. We developed
this demonstration for the following reasons: (1) SSDI beneficiaries with psychiatric
impairments represent roughly one-quarter of the SSDI roles; (2) there are employment
supports that can help people with mental illness return to work; and (3) despite surveys
consistently indicating that they want to work, individuals with severe mental illness have
one of the lowest employment rates of any subpopulation.

Conducted between November 2006 and July 2010, the MHTS included
2,238 beneficiaries in 23 study sites throughout the United States. Beneficiaries
volunteering to participate in the study received a random assignment to either a
treatment group or a control group and participated for 24 months. The study collected
data on the primary outcome measures of employment (including earnings), health status,
and quality of life. The contractor completed the final report in August 2011, and it is
available on our website: http://socialsecurity.gov/disabilityresearch/mentalhealth.htm.

Overall, study findings show that beneficiaries in the treatment group ended the study,
relative to the control group, with the following:

significantly better employment rates

higher earnings and income;

more hours worked;

a greater number of months worked;

better mental health; and

a higher quality of life.

Study findings also show that the treatment package played a significant role in reducing
inpatient hospital use (for both admissions and number of days) and reducing psychiatric
crisis visits. This reduction in hospital days per year translated into reduced annual medical costs of approximately $1,800 per person.13 The study had no impact on increasing SGA or reducing SSDI benefit payments among beneficiaries.

We continue to do research on the study population and to conduct outreach activities to
share findings, promote best practices, and encourage additional research in this area.

Accelerated Benefits Demonstration

Under current rules, most SSDI beneficiaries have a 24-month waiting period after the
date of entitlement before they are eligible for Medicare. In this project, we tested the
effect of providing immediate access to healthcare to newly entitled SSDI beneficiaries.
Specifically, we tested whether providing medical benefits sooner would result in better
health and return to work outcomes for beneficiaries. The project started in October
2007. We enrolled about 2,000 beneficiaries in one of three study groups: (1) a control
group; (2) a group that receives a medical benefits package (AB group); and (3) a group
that receives the medical benefits package and comprehensive support services (AB plus
group). We completed this project in January 2011. The final report is available to the
public on our website: http://www.ssa.gov/disabilityresearch/accelerated.htm. We
continue to use the data collected during the project to further examine outcomes in the
areas of health and mortality, earnings and employment, and health care spending and
utilization.

We found positive effects on mental health and physical health for those who had
access to the AB health insurance.

AB Plus services encouraged people to look for work, increased use of
employment services, and increased Ticket to Work participation.

The AB intervention led to a 50 percent increase in employment levels and a
significant increase in annual earnings two years after enrollment in the project.
These impacts shrink by the third year, with all groups reaching a similar level of
employment and earnings.

We will continue to use the data collected during the project to track outcomes to assess
whether there are long-term employment gains and reduced need for health care that
result in future savings for the Federal government.

Youth Transition Demonstration

The YTD seeks to identify effective and efficient methods for assisting youths to
transition from school to work and become self-sufficient. This project identifies
services, implements service interventions, and tests modified SSI income and resource
exclusions that lead to better education and employment outcomes for youth with
disabilities. The YTD serves youths between the ages of 14 and 25 who receive SSI or
SSDI (including child's insurance benefits based on disability) or who are at heightened
risk of becoming eligible for those benefits.

To date, we have found impacts on earnings in three of the six sites. YTD services
increased the paid employment rate for disabled youth (relative to control groups) from
approximately 24 percent to 43 percent in West Virginia and from approximately 13
percent to 23 percent in Miami, Florida.14 Based on these research findings, SSA has
asked the WIPAs to focus additional outreach in the coming year to families with
disabled youth. We believe WIPA services to this population may yield tangible
outcomes in the labor market.

Although this is not an SSA demonstration, I want to take this opportunity to mention
another effort to improve future opportunities for young SSI beneficiaries with
disabilities. Promoting Readiness of Minors in SSI (PROMISE) is an interagency pilot
project with the Departments of Education, Labor, and Health and Human Services to
improve outcomes for youth receiving SSI payments through better, more-strategic
provision of services to children with disabilities and their families. The Department of
Education will award competitive grants to States that will develop and implement model
demonstration projects that will test and evaluate interventions provided through State
interagency partnerships to improve the educational and economic well-being of children
receiving SSI and their families. The model demonstration projects will focus on
improving a range of outcomes, such as graduating from high school ready for college
and a career, completing postsecondary education and job training, and obtaining
competitive employment in an integrated setting. In conjunction with improving
outcomes, PROMISE aims to reduce reliance on SSI and, in the long run, other public
services through greater self-sufficiency.

PROMISE will encourage innovation by better coordinating existing programs and
services that are likely to reduce the probability of future dependency on SSI. The
program also intends to help families of child SSI recipients through improved services
and supports such as education and training. Our YTD findings have helped shape
PROMISE. The importance of early employment, as demonstrated by YTD, will be
central to the PROMISE service package. We will further support this effort by
developing and conducting a rigorous evaluation to guide implementation and to gather
evidence on the effectiveness of the interventions.

New Demonstration Authority

The President’s Budget for Fiscal year 2014 includes a legislative proposal that would
authorize us to test ways to help people with disabilities remain in the workforce. In
addition to providing new authority to test early interventions, it would re-establish and
broaden the SSDI demonstration authority that we previously had. Thus, we would be
able to further test effective ways to boost employment and support current SSDI and SSI
beneficiaries who are seeking to return to work, including through work incentive
simplifications.

We urge you to support this proposal. Demonstration projects are the best vehicles for
identifying promising program changes and measuring their effects on disability
beneficiaries and potential beneficiaries. However, our authority to initiate SSDI
demonstration projects expired in December 2005.

Return to Work and Overpayments

A work continuing disability review (work review) evaluates a beneficiary’s work
activity to determine if the work represents SGA and if eligibility for benefits should
continue. When conducting a work review, we consider a number of factors to determine
whether an SSDI beneficiary who is working can continue to receive monthly benefits.
For example, an SSDI beneficiary who has not completed a trial work period will
continue to receive monthly benefits even if his or her earnings are above the SGA level.
In FY 2012, we completed about 287,650 work reviews. These work reviews resulted in
more than 123,740 cessations of benefits or subsequent reinstatements or suspensions of
benefits during the extended period of eligibility.15

The potential for an overpayment may discourage some beneficiaries from working, and
we have taken several steps to handle our work reviews more quickly and efficiently. For
example, we allocated additional staff resources to analyze work reports and to conduct
work reviews, and we are targeting the oldest cases – those over 365 days old. We are
also shifting work to offices with more capacity to conduct work reviews.

Furthermore, we have established internal goals for processing work reviews. When we
receive a report of work directly from a beneficiary, our goal is to screen that report
within 30 days to determine if the work activity is likely to affect benefit payments or
entitlement. If the work activity will affect benefits or entitlement, we assign the case for
review, with a goal of completing the case review and handling within 270 days.
Although we instruct beneficiaries to report any work activity, most do not. We learn
about this work activity through our annual match with earnings information from the
IRS. In those cases, our goal is to process 95 percent of the work alerts we receive within
one year of receipt.

We also developed a statistical model that predicts the likelihood of beneficiaries being at
risk of receiving large earnings-related overpayments.

In October 2010, we began a pilot using this model in our New York Region. We
prioritize the alerts we receive on SSDI beneficiaries with unreported earnings
according to the likelihood of risk of a “critical” overpayment ($20,000 or more).
Prioritization is based on historical earnings, prior alerts, previous benefit
increases due to earnings, overpayments, amount of monthly benefits, time on the
rolls, and impairment codes. In June 2011, we expanded the pilot to include over
50 percent of the work review cases, with the inclusion of the Kansas City Region
and the Office of Central Operations. We completed our pilot evaluation in May
2013 and implemented the predictive model nationally in June 2013.

In October 2012, we began to pilot a process to identify and delay pending benefit
recomputations for beneficiaries who also have pending work reviews. We use
our predictive model to identify the beneficiaries at risk of receiving large
earnings-related overpayments and delay the increase in benefits for six months
for the highest predicted 10 percent of cases nationwide. This delay provides
additional time to complete work reviews, and prevents an increase in the benefits
that we may later determine are not payable as a result of completing the work
review. The initial results of the pilot are promising, and we plan to continue the
pilot in October 2013 with approximately the same size sample.

Finally, we are developing new policies and procedures that will streamline work review
case processing, resulting in faster decisions and reduced overpayments. Examples
include the following:

minimizing documentation for work activity that is obviously not SGA; and

updating our work review instructions to improve coordination between our field
offices and processing centers.

Let me repeat that our work incentives are very complex. This complexity can contribute
to overpayments in two ways – disability beneficiaries may not understand when they have to report earnings to us, and our employees need considerable time to handle work
reviews properly. Both of these can contribute to the likelihood of overpayments.
We believe simplifying work incentives would reduce overpayments resulting from
work, thereby making reporting and administration easier and encouraging more
disability beneficiaries to attempt to work.

Conclusion

We are proud of the role our disability programs play in the Nation’s social safety net. It
is not realistic to expect that every disability beneficiary can become financially
independent by working. However, we must find ways to improve work outcomes for
those who can. We look forward to continuing our work with this subcommittee to
support as many individuals as possible to pursue their employment goals and reduce
their reliance on disability insurance benefits.
Thank you again for your support and interest in this matter.

3 SSA cost reimbursement is in addition to the allotment of Federal funds State VR agencies already
receive from the Department of Education under Title I of the Rehabilitation Act of 1973
(as amended).

4 Seventeen percent of those reimbursement claims were supplemental claims for service to the
same beneficiary.

6 Our rules allow State VR agencies and ENs to work collaboratively in an arrangement known as
Partnership Plus. This team approach allows beneficiaries to consecutively access services from
both State VR agencies and ENs. We believe this initiative increases the likelihood that
beneficiaries will keep working, become self-supporting, and leave the rolls.

7 Craig Thornton, “Can the Ticket to Work Program Be Self-Financing?” Washington, DC:
Mathematica Policy Research, Inc., 2012. Specifically, operational costs were approximately
$32 million, and the costs for payments to ENs were approximately $14 million, for a total annual
cost of $46 million.

8 To restart the WIPA program, we will award FY 2013 WIPA cooperative agreements to those
entities submitting compliant applications that have previously applied for, received (through a
competitive process), and performed WIPA cooperative agreements over the past several years.
Upon reaching agreement with the entity on a budget, we will fund the cooperative agreements
for a full 12 months from August 1, 2013 through July 31, 2014. We expect to spend $20 million
for the grants and $3 million for training and technical assistance. This period will be the first
year of an up-to two-year extension of the previous cooperative agreements. The second year
will be contingent on an entity’s satisfactory performance during the year.

9 I have attached a copy of the benchmark document at the end of my testimony (Appendix B).

10 Our authority to initiate new demonstration projects expired on December 18, 2005.

11 The four States were Connecticut, Utah, Wisconsin, and Vermont.

12 See “The Impact of Changing Financial Work Incentives on the Earnings of Social Security
Disability Insurance (SSDI) Beneficiaries”, Journal of Policy Analysis and Management, Vol. 30,
No. 4, 2011 by Robert R. Weathers II and Jeffrey Hemmeter.

13 Average is for all MHTS participants in the treatment group.

14 Two charts at the end of my testimony illustrate some of the YTD results (Appendix C).

The Social Security Act (Act) defines disability as the inability to perform substantial gainful
activity (SGA) due to a medically determinable impairment that has lasted or is expected to last
at least one year or to result in death. SGA refers to the performance of significant physical or
mental activities in work for pay or profit or in work of a type generally performed for pay or
profit. SGA is a test for determining both initial and continuing eligibility for Social Security
Disability Insurance (SSDI). In initial claims situations, if a claimant’s work is at SGA, then the
claimant generally does not meet the definition of disability and does not receive benefits.
Countable earnings averaging over $1,040 a month (in 2013) demonstrate the ability to perform
SGA in most cases. For claimants who are blind, countable earnings averaging over $1,740 a
month (in 2013) usually demonstrate SGA for SSDI.

The Act includes employment support provisions, commonly referred to as work incentives that
encourage our disability beneficiaries to test their ability to work. Some of the work incentives
that we may apply to SSDI beneficiaries are:

Trial Work Period (TWP) (Section 222(c) of the Act)—Allows beneficiaries to test their
ability to work for at least nine months. During the TWP, beneficiaries receive their full
benefits regardless of how high their earnings might be so long as they have not fraudulently
concealed work activity and they continue to have a disabling impairment. The TWP
continues until the beneficiary accumulates 9 months (not necessarily consecutive) in which
he or she performed what we call “services” within a rolling 60-consecutive-month period.
In 2013, we consider work to be “services” if the beneficiary earns more than $750 a month
or works more than 80 self-employed hours in a month.

Extended Period of Eligibility (EPE) (Section 223(a)(1) of the Act)— At the end of the
TWP, a 36-consecutive-month EPE begins unless we find that the beneficiary has medically
improved and no longer meets the definition of disability. During the EPE, we pay benefits
for:

the first month that earnings exceed SGA and the next two months (we refer to this as the
“grace period”); and

any month the beneficiary’s earnings do not exceed SGA.

After the EPE ends, benefits terminate if a beneficiary's earnings exceed the SGA level in
any month.

Impairment Related Work Expenses (Section 223(d)(4) of the Act)—We deduct the outof-
pocket costs for disability-related items and services that a beneficiary needs in order to
work when we determine if work is SGA.

Extended Medicare (Section 226(b) of the Act)—If a beneficiary’s benefits are terminated
because of work, Medicare coverage will continue for at least 93 months after the end of the
trial work period (at least eight and one-half years from first return to work).

Expedited Reinstatement (EXR) (Section 223(i) of the Act)—We may be able to start
benefits again without a new application if a person stops working within five years of the
previous termination date. To be eligible for EXR, the beneficiary must: (1) have had his or
her benefits terminated due to work; (2) become unable to continue working at SGA within
five years of that termination; and (3) have the same or a related medical impairment.

Unsuccessful Work Attempts (20 CFR 404.1574(c) and 20 CFR 416.974(c))—We
disregard earnings from work attempts of six months or less that were stopped or reduced to
below SGA due to the beneficiary’s impairment or the removal of special conditions.

“Section 301” Payment Continuation (Sections 225(b) and 1631(a)(6) of the Act (created
by section 301 of Public Law 96-265))—This provision allows for continuation of SSDI or
SSI disability benefits to individuals whose disability medically ceases while they are
participating in a vocational rehabilitation or similar program. To be eligible the individual
must have begun participating before the month his or her disability ceased. We must also
determine that completion of the program will increase the likelihood that the individual will
not return to the disability benefit rolls.

Work incentives are also available to Supplemental Security Income (SSI) disability
beneficiaries. For SSI disability, SGA is a test to determine only initial eligibility rather than
continuing eligibility. We do not use SGA as a factor to determine initial eligibility to SSI for
blind individuals. When an SSI disability beneficiary returns to work, we do not apply SGA to
determine if eligibility continues. We count income and earnings (after allowable deductions) to
determine the monthly payment amount. Some of the work incentives that reduce countable
earnings for SSI disability are:

Blind Work Expenses (Section 1612(b)(4)(A)(ii) of the Act)—For people receiving SSI
based on blindness, we exclude any earnings used to meet expenses needed to earn that
income. The expenses do not need to be related to blindness.

Impairment Related Work Expenses (Section 1612(b)(4)(B)(ii) of the Act)—We exclude
out-of-pocket costs for certain impairment-related items and services needed to work when
we count earned income for SSI.

Plan to Achieve Self-Support (PASS) (Sections 1612(b)(4)(A)(iii), 1612(b)(4)(B)(iv), and
1613(a)(4) of the Act)—Disability beneficiaries can develop an individualized employment
plan that has the goal of reducing or eliminating their dependence on benefits. Under the
PASS provisions, an individual can set aside money for specific employment goals that we
will not count as income and resources for the SSI means test while the PASS is in effect.
The PASS must contain an occupational goal that we expect to increase the individual's
prospect for self-support. It must also specify beginning and ending dates, and target dates
for reaching milestones that reflect progress towards achievement of the occupational goal.

Student Earned Income Exclusion (Section 1612(b)(1) of the Act)—We exclude some of
the earnings of SSI beneficiaries who work and are under age 22, and regularly attending
school or training. In 2013, we can exclude $1,730 of earnings monthly up to a maximum of
$6,960 annually.

Special SSI Payments for Persons Who Work (Section 1619(a) of the Act)—Recipients
can receive SSI cash payments even when earned income is at the SGA level as long as they
continue to meet all other eligibility rules.

Medicaid While Working (Section 1619(b) of the Act)—Medicaid coverage can continue
even if earnings are too high to allow an SSI payment. Medicaid coverage will continue until
an individual's earnings reach an annual “threshold” level. Each State establishes a threshold
level every year. We can also determine individualized thresholds for individuals with
extremely high medical costs they would be unable to pay without Medicaid.

Expedited Reinstatement (EXR) (Section 1631(p) of the Act)—We may be able to start
benefits again without a new application if a person stops working within five years of the
previous termination date. To be eligible for EXR, the person must: (1) have had his or her
benefits terminated due to work; (2) become unable to continue working at SGA, within
five years of that termination; and (3) have the same or a related medical impairment.

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